| ASX Falls on US Recessionary Fears
The Australian stock market has opened significantly lower today following a tumble on Wall Street last Friday, as a sharp rise in the US unemployment rate sparked fears that the economy is heading into a recession.Stocks fell by 2.1% and the Australian dollar has opened lower at 87 cents, down from Friday's close of 88 cents.On Friday, shares finished higher as investors seeking exposure to surging base metals and commodities prices began buying mineral and oil producers, and the banking sector was being scoured by bargain-hunters.The S&P/ASX 200 closed up by 16.1 points or 0.3% at $6,306.8 and the All Ordinaries rose by 12.8 points or 0.2% to finish at $6,385.4.However when share prices slumped in New York on Friday, the prognosis was grim for the Australian stockmarket Monday morning.The US unemployment rate hit 5% for the first time in more than two years in a sign the US economy's woes are beginning to extend beyond the subprime housing crisisData was released Friday which showed US non-farm payrolls rose by just 18,000 in December, the lowest result in almost five years and well below expectations for a gain of 70,000.The Dow Jones Industrial Average closed down 256.54 points or 2.0% at 12,800.18, dropping below the 13,000 mark.The All Ordinaries index was down 136 points to 6,249 while the ASX 200 also fell 136 points to 6,171.The losses across the ASX were broad basedAt 1:00PM AEST BHP Billiton was trading down by 2.37% at $39.88 and the NAB has dropped by 2.57% to $36.37.
Friends Provident to hold on to F&C
Today is crunch time for embattled insurer Friends Provident. It is due to unveil a review of its business following the collapse of a nil-premium merger with Resolution Life last year. The company is expected to say its 52pc stake in fund manager F&C, worth about £700m, is up for sale. About 17pc of F&C stock is held by another asset manager -Dawnay Day - and the remainder is freely floated. In the past year, the share price has oscillated wildly as bid rumours came and went. But it is now trading flat compared to six months ago when Questor tipped it as a Sell. More recently, the price has been inflated by expectations that a bidder could emerge and one or two are tipped to be interested. Simultaneously, however, about 27m of the 45m F&C shares available on the stock market are being "shorted" by those expecting bad news.
Indian sharemarket chokes on foreign restrictions
Indian shares plunged more than 9 percent and the rupee tumbled to its lowest in almost a month today after the stock market regulator proposed curbs on foreign portfolio inflows to jam the brakes on record-breaking markets. Trading in shares was suspended for an hour immediately after opening as the main indexes' slide triggered circuit breakers and rupee retreated after a run up to 9-year highs against the dollar in recent weeks. Finance Minister Palaniappan Chidambaram said the proposals were part of a series to stem capital, which has been flooding into India's markets via indirect instruments known as participatory notes, and they were not a ban, just a cap on the amount of money coming in. "Investors through participatory notes are certainly welcome to invest in India, but for the present it is important to moderate these capital inflows,'' he told a news conference.
Indonesian shares close lower on Dow fall, record oil price - UPDATE
Gains in oil producers and palm plantation stocks helped limit the market fall although trading volume remained light as most players were still away for the new year break. The composite index closed down 16.44 points or 0.6 percent at 2,715.07, off a low of 2,702.76. The LQ-45 index was down 5.20 points at 591.35. Decliners led gainers 121 to 59, with 57 stocks unchanged. Volume was 2.11 billion shares valued at 2.93 trillion rupiah. The Indonesian rupiah was trading at 9,407/9,412 to the US dollar, compared to 9,390/9,400 late Wednesday. "The falls on Wall Street overnight and the rise in the oil price to a record level were the main drivers of the market's fall today," Mandiri Securities analyst Rafdi Prima said. Technically speaking, he said the key index has been consolidating since mid December after going through a strong rally in November.
From East to West, panic grips the world’s investors
After the carnage on global markets on Black Monday, Japan and Australia were the first powerhouse economies to see the dawn of Tuesday morning. While American markets had taken Monday off for Martin Luther King Day, the panic gripping global markets had continued to wreak havoc.
Yesterday, as US traders slept, the bloody trading began anew on the other side of the world. By midnight GMT Australia’s markets had been open an hour. Investors’ rush for the door crashed the website of the country’s leading online share broker, CommSec, as the market started an immediate downward spiral. The stock market’s fall of nearly 3 per cent on Monday looked timid as it raced towards its biggest one-day slide in 20 years. Hans Kunnen, the head of investment markets research for Colonial First State, said: "Judging by the mood of the market today, the bears are certainly winning."
However, what the Asian markets did not know, as they started their downward spiral, was that in America the members of the Federal Reserve were calling each other.
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